Buyer-supplier relations

It is becoming a determining factor in the durability of relationships between buyers and sellers.

The health crisis does not seem to have hindered the importance of digitalization projects. On the contrary. In the 2021 edition of its annual survey of corporate decision-makers, Décision Achats magazine reveals that purchasing software solutions are considered "absolutely essential" for more than 82% of respondents.

Geoffrey Lietar, partner at procurement consultancy EPSA, notes that “the shocks brought about by the COVID-19 pandemic have only accelerated digital transformation projects, and this underlying trend will inevitably continue”. He adds that "companies with existing e-procurement tools were more resilient during the height of the crisis." The impact of digital transformation on efficiencies and competitiveness was highlighted during the unprecedented economic downturn and supply issues due to the pandemic.

More than 60% of purchasing departments have already implemented or are in the process of implementing a digital transformation strategy*.

They were only 46 percent in 2019. But some sectors are lagging behind in this respect, such as the hotel industry, healthcare and the food industry. In the latter, only 9% of purchasing departments have already set up a digitalized process. However, attitudes are changing, with 37% of them acknowledging that such a strategy is being considered and will be implemented soon.

Retail at the dawn of profound digital changes

When digital solutions are in place, compared to other business sectors, Retail and Distribution have a low user adoption rate, well below the average. In light of this, the shift to digitalization "must essentially involve the associated business transformation, and in particular the evolution of employee skills and practices**.

But at the same time, the rate of companies in the sector noticing an improvement in their performance attributable to digital transformation reaches 81%, thus being above average. This high level of satisfaction no doubt explains the level of investments planned: companies plan to invest an average of €1,470,000 over a two-year period, compared to an average of €1,075,000 for all business sectors combined**.

"Data management is the source of competitive advantages in the retail sector more than anywhere else, both in terms of sales and upstream of the chain in terms of purchasing. The traceability of supply chains is particularly promising: technological innovation makes it possible to increase the reliability of operations and secure sources of supply in line with CSR issues," says Antoine Pieraumont, a consultant with a consulting firm specializing in the digitalization of the purchasing function.

Leveraging Performance and Management

"79% of purchasing departments perceive improvements in their business performance and organizational benefits following the deployment of a digital solution**.

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Simplification and cost reduction are the primary motivations of companies involved in this approach, cited in 43% of cases, ahead of the desire to optimize sourcing and supplier management (24% of cases).

The automation of transactions is therefore crucial. It allows a shortening of the bidding cycle, a better control of expenses, as well as a better collaboration with suppliers. RPA (Robotic Process Automation) solutions are part of this trend by reducing the time spent on low value-added tasks and errors related to manual operations.

In a context of digitalization of the entire purchase-to-pay cycle, buyer-supplier relations are entering a new era: upstream order taking becomes more reliable, and once approved, many downstream tasks are improved thanks to data sharing:

• invoicing times are reduced
• disputes are reduced,
• reconciliation of the invoice with the initial order is facilitated, as is collection

The indicators and dashboards available allow all the actors to have the same data updated in real time. It is thus possible to easily determine the volume of orders processed, the quantities of pending orders, the validations, the associated amounts, as well as information which is long-term, such as the evolution of the receipt of orders, the processing time spent, the rate of disputes, and their reasons.

Data, a source of relational value creation

Digitized processes result in various quantitative gains, such as invoicing, where costs are reduced by 50 to 80%, depending on the study, while the average processing time is reduced by 30%. But the benefits are also qualitative.

The consulting giant EY estimates the average processing time for a paper invoice at 14 days, including 8.6 days from receipt to payment. Better control of cash flow thanks to electronic invoicing shortens these times, improving relations with suppliers at the same time. The possibility for the latter to have a dedicated portal allows them to have a visibility at any time of the invoices in progress, paid, archived.

The progressive transposition of new digital uses from private life to the professional sphere is becoming widespread in companies. "The consultation of current approval requests, validated orders and supplier profiles is now just a click away. Improved control over data is a valuable decision-making aid. By simply checking the suppliers with whom we spend the largest amounts, we can personalize exchanges more, negotiate differently, and make better trade-offs," says Antoine Pieraumont.

A strategic support for the future

In addition to the cost savings, time savings and improved buyer-supplier relationships that result from the digital transformation of purchasing, the integration of innovative functionalities in line with today's major challenges also forms a lever for the business.

One of the main leaders in the contract catering sector is one of the players for whom the CSR dimension now represents a key strategic element. Pascale Delaunet (***), the company's director of purchasing and logistics, explains that "an artificial intelligence function was recently integrated into the existing technological system with the aim of directing the creation of recipes by favoring seasonal fruits and vegetables available in short supply chains. At the height of the health crisis in the spring of 2020, this allowed us to remain very agile and fully focused on locally grown produce.”

In the same vein, predictive capabilities are also a new challenge. A step-by-step evolution is generally recommended in this area: before talking about predictive capabilities, it is relevant to consider a descriptive approach, using algorithms to establish correlations. Knowledge of supplier history, delivery dates and constraints, weather information and many other similar elements become essential parameters for better decision making.

By analyzing the evolution of the relationship with the supplier, the predictive system makes it possible to know precisely which supplier has the best price with the best product at a given moment, according to its own objectives and priorities.

"We have also integrated the notion of “nutri-score” into our information system. The aim is to provide nutritional guarantees automatically, thus putting digital technology at the service of CSR priorities," says Pascale Delaunet.

The offer of seasonal fruits and vegetables, which involves shorter circuits and more products from local markets, has an environmental interest but also provides faster revenues: The objective is also to take into account seasonal variations. The year 2020 was rich in yellow fruits such as peaches.

Digital tools therefore enable us to offer products adapted to the particularities of each year, from which our menus are then designed," she adds. Still on a CSR level, the carbon impact or the consequences on the employment pool of a region become criteria that decision-makers can easily take into account thanks to this type of innovative tool.

(*) 2020 study carried out by AgileBuyer and the CNA (National Purchasing Council)

(**) Digital Procurement 2021 survey, published by the consulting firm PwC

(**) The first and last names have been changed